18. Gross Margins Introduction -------------------------------------------- 2 Lemons standard density planting Central Coast, NSW ----------------------------------- 3 Lemons double density planting Central Coast, NSW ----------------------------------- 5 Other gross margins - Northern Territory... 7 New Zealand... 7 Photo by Greg Moulds 18 1
INTRODUCTION Gross margins give an insight into the production costs, yields and predicted likely returns for a particular crop enterprise. They should, however, be treated with caution because enterprise location and management and marketing options and returns are extremely variable between different growers and different growing regions. For example the detailed gross margins included here for the Central Coast of NSW reflect the high pest and disease pressures of a coastal climate. They also reflect the local marketing situation where most growers sell their fruit in bulk to a centralised packing facility for sale largely on the domestic market. In order to more accurately predict the likely costs and returns for growing lemons you need to incorporate the impact of local regional growing conditions on management costs as well as factoring in where and how you will market your fruit. On the domestic market the highest returns for lemons are received between November and March. Prices at this time are between $20-35/carton. The lowest prices are received for the main winter crop between June and August. Prices at this time are between $10-12/carton. 18 2
Enterprise LEMONS (Standard Density Planting) GROSS MARGIN BUDGET: 1 ha Standard Budget Budget INCOME: 25 t/ha @ $200 /T $5,000 A. Total Income/ha $5,000 VARIABLE COSTS: Irrigation Power 0.5 ML/ha $13.00 /ML $6.50 Maintenance (pump & system) 0.5 ML/ha $10.00 /ML $5.00 Fertiliser 3 x Urea 0.12 T/ha $585 /T $210.60 1 x Triple Super 0.16 T/ha $520 /T $83.20 1 x Muriate of Potash 0.04 T/ha $525 /T $21.00 Insect Control 1 x Oil Spray (1%) 20.0 L/ha $2.44 /L $48.78 1 x Maldison 3.8 L/ha $8.75 /L $32.81 1 x Maldison Bait Spray 0.75 L/ha $8.75 /L $6.56 1 x Yeast autolysate Bait Spray 1.2 L/ha $10.00 /L $12.00 Disease Control 3 x Cuprous Oxide 2.25 kg/ha $7.00 /kg $47.25 Weed Control 1 x Bromacil/Diuron 2.5 kg/ha $39.00 /kg $97.50 2 x Glyphosate (spot spraying) 2.5 L/ha $6.75 /L $33.75 Crop Management 1 x Hand Pruning 10 min/tree $14.00 /hr $816.67 Tractor costs 6 x Sod mowing 0.5 hr/ha $12.28 /hr $36.84 4 x Check Emitters 0.2 hr/ha $3.00 /hr $2.40 1 x Herbicide 2.0 hr/ha $13.10 /hr $26.20 2 x Spot Spray 2.0 hr/ha $11.70 /hr $46.80 5 x Fertiliser 1.0 hr/ha $12.20 /hr $61.00 4 x Air blast Spray 2.0 hr/ha $13.41 /hr $107.28 1 x Oscillating boom Spray 3.0 hr/ha $15.03 /hr $45.09 1 x Mulch Prunings 1.0 hr/ha $12.70 /hr $12.70 1 x Bait spray 1.0 hr/ha $11.70 /hr $11.70 Harvest Picking (multiple selective) 20 min/tree $14.50 /hr $1,691.67 Cartage 25 t/ha $4.00 /T $100.00 Levies 25 t/ha $3.25 /T $81.25 B. Total Variable Costs $3,644.55 Gross Margin per ha (A-B) $1,355.45 18 3
Enterprise LEMONS - (Standard Density Planting) SENSITIVITY ANALYSIS TABLE 1- Effect of Yield and Price on Gross Margin /ha YIELD ON FARM PRICE ($/t) (t) $100 $125 $150 $175 $200 $250 $300 $350 $400 10 -$1,521 -$1,271 -$1,021 -$771 -$521 -$21 $479 $979 $1,479 15 -$1,395 -$1,020 -$645 -$270 $105 $855 $1,605 $2,355 $3,105 20 -$1,270 -$770 -$270 $230 $730 $1,730 $2,730 $3,730 $4,730 25 -$1,145 -$520 $105 $730 $1,355 $2,605 $3,855 $5,105 $6,355 30 -$1,019 -$269 $481 $1,231 $1,981 $3,481 $4,981 $6,481 $7,981 35 -$894 -$19 $856 $1,731 $2,606 $4,356 $6,106 $7,856 $9,606 40 -$768 $232 $1,232 $2,232 $3,232 $5,232 $7,232 $9,232 $11,232 Notes: Planting Density - 350 trees/ha (6m x 4.5m spacing) Tree age: - 5 years Picking: - Up to 5 separate harvests per year - selective picking of mature fruit - Harvest costs in the sensitivity analysis are assumed to be linearly relative to the yield Machinery: - Machinery costs include variable costs only for the tractor and implements Labour: - The labour requirement for tractor use is 27.8 hrs/ha - Using a labour cost of $14 /hr an additional $389 /ha can be deducted from the budget for tractor use labour Economic notes - These costs are only a guide. They do not include overhead costs. Use your own figures to estimate your own establishment costs. All costs/prices do not include GST. The management practices or products outlined in the budget does Not imply a recommendation by NSW Agriculture. The management practices and products outlined in the budget are only a guide to costs and are of practices that may currently, or may be anticipated to be used in the field. Always check chemical labels for up to date rates, alternative products may have different rates 18 4
Enterprise LEMONS (Double Density Planting) GROSS MARGIN BUDGET: 1 ha Standard Budget INCOME: 52 T/ha @ $200 /T $10,400 A. Total Income/ha $10,400 VARIABLE COSTS: Irrigation Power 0.5 ML/ha $13.00 /ML $6.50 Maintenance (pump & system) 0.5 ML/ha $10.00 /ML $5.00 Fertiliser 0.5 x Lime 1.20 T/ha $180 /T $108.00 3 x Ammonium Nitrate 0.23 T/ha $580 /T $391.50 2 x Muriate of Potash 0.08 T/ha $525 /T $84.00 1 x Magnesium Sulphate 35.0 kg/ha $0.68 /kg $23.80 Insect Control 1 x Oil Spray (1%) 40.0 L/ha $2.44 /L $97.56 1 x Maldison Bait Spray 1.90 L/ha $8.75 /L $16.63 1 x Yeast autolysate Bait Spray 3.0 L/ha $10.00 /L $30.00 Disease Control 6 x Copper Hydroxide 8.8 kg/ha $8.00 /kg $422.40 4 x Zineb 1.5 kg/ha $24.00 /kg $144.00 Weed Control 1 x Bromacil/Diuron 2.5 kg/ha $39.00 /kg $97.50 4 x Glyphosate (spot spraying) 2.5 L/ha $6.75 /L $67.50 Crop Management 1 x Hand Pruning 8 min/tree $14.00 /hr $1,344.00 Tractor costs 6 x Sod mowing 0.5 hr/ha $12.28 /hr $36.84 4 x Check Emitters 0.2 hr/ha $3.00 /hr $2.40 1 x Herbicide 2.0 hr/ha $13.10 /hr $26.20 4 x Spot Spray 2.0 hr/ha $11.70 /hr $93.60 5 x Fertiliser 1.0 hr/ha $12.20 /hr $61.00 12 x Air blast Spray 2.0 hr/ha $13.41 /hr $321.84 1 x Oscillating boom Spray 3.0 hr/ha $15.03 /hr $45.09 1 x Mulch Prunings 1.0 hr/ha $12.70 /hr $12.70 1 x Bait spray 1.0 hr/ha $11.70 /hr $11.70 Harvest Picking (multiple selective) 15 min/tree $14.50 /hr $2,610.00 Cartage 52 T/ha $4.00 /T $208.00 Levies 52 T/ha $3.25 /T $169.00 B. Total Variable Costs $6,436.76 Gross Margin per ha (A-B) $3,963.24 18 5
Enterprise LEMONS - (Double Density Planting) SENSITIVITY ANALYSIS TABLE 1- Effect of Yield and Price on Gross Margin /ha YIELD ON FARM PRICE ($/t) (t) $100 $125 $150 $175 $200 $250 $300 350 $400 37 -$1,875 -$950 -$25 $900 $1,825 $3,675 $5,525 $7,375 $9,225 42 -$1,662 -$612 $438 $1,488 $2,538 $4,638 $6,738 $8,838 $10,938 47 -$1,450 -$275 $900 $2,075 $3,250 $5,600 $7,950 $10,300 $12,650 52 -$1,237 $63 $1,363 $2,663 $3,963 $6,563 $9,163 $11,763 $14,363 57 -$1,024 $401 $1,826 $3,251 $4,676 $7,526 $10,376 $13,226 $16,076 62 -$811 $739 $2,289 $3,839 $5,389 $8,489 $11,589 $14,689 $17,789 67 -$598 $1,077 $2,752 $4,427 $6,102 $9,452 $12,802 $16,152 $19,502 Notes: Planting Density - 720 trees/ha (5.5m x 2.5m spacing) Tree age: - 5 years Picking Fruit: - Up to 8 separate harvests per year - selective picking of mature fruit. Fruit is clipped for premium quality fruit - Harvest costs in the sensitivity analysis are assumed to be linearly relative to the yield Machinery: - Machinery costs include variable costs only for the tractor and implements Labour: - The labour requirement for tractor use is 47.8 hrs/ha - Using a labour cost of $14 /hr an additional $669 /ha can be deducted from the budget for tractor use labour Economic notes - These costs are only a guide. They do not include overhead costs. Use your own figures to estimate your own establishment costs. All costs/prices do not include GST The management practices or products outlined in the budget does Not imply a recommendation by NSW Agriculture. The management practices and products outlined in the budget are only a guide to costs and are of practices that may currently, or may be anticipated to be used in the field. Always check chemical labels for up to date rates, alternative products may have different rates Extracted from: Falivene, S. Farm Budget Handbook 2003 NSW Citrus. NSW Agriculture 2003. 18 6
OTHER GROSS MARGINS Predicted gross margin for 8 year old lemons at Katherine, Northern Territory Assumes average yield of 57t/ha (150kg/tree at 380 trees/ha); Assumes a return of $1.50/kg; Assumes harvesting season from January -August when domestic market prices are high. Item $ Income 85,500 Variable costs Field Costs* 3,513 Picking & Packing 20,320 Freight 17,955 Commission 10,260 Total Variable Costs 52,048 *Field Costs (% of total) field costs Fertiliser 41 Weed control 9 Slashing 2 Pest/Disease control 21 Irrigation 13 Pruning 10 Sundries 4 Gross margin 33,452 Extracted from ''Economic Assessment of Tropical Lemon and Lime Production in the Katherine and Darwin Region''. H. Ngo. DPIF. October 1998. Gross margin (per ha) analysis for lemons in New Zealand (NZ dollars) Item $ % of total Income 13,903 Expenditure: Fertilisers 375 6.7 Mowing 153 2.7 Herbicide 166 3.0 P & D control 824 14.6 Skirting & Pruning 452 8.0 Picking 1,304 23.2 Packing 1,613 28.7 Commission 310 5.5 Freight 339 6.0 Levies 93 1.6 Total Variable Costs 5,626 Gross Margin 8,277 Extracted from ''Growing Citrus in New Zealand : A Practial Guide''. Produced by NZ Citrus Growers Inc. 1997. 18 7